ASCOLA Annual Conference, 26 June 2020
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Thank you so much for inviting me to join you today.
The coronavirus has disrupted a lot of plans this year. If 2020 had been an ordinary year, we’d be meeting today in the beautiful city of Porto. I’m very sorry that those plans have had to change – but I’m glad you’ve found a way for this conference to go ahead, even if it means calling in from the box room where the kids won’t find you, instead of strolling by the Douro.
And that’s possible, of course, because of digitisation. In the last few months, as we’ve had to avoid physical interaction, digital technology has stepped in to fill the gap. It’s allowed us to carry on learning and shopping, working and seeing our families. It’s even taken us on virtual visits to museums and theatres. And that experience has been a powerful reminder of just how much digital technology has to offer.
A digital world that works for Europeans
And that makes it more important than ever, to make sure that digital technology works well for us. To make sure that it doesn’t harm our freedoms and our rights. That its opportunities are shared by everyone – not limited to the few who can afford it. And that digital businesses listen to people’s needs, and produce innovative products that make our lives better.
So one of this Commission’s very top priorities is to help shape the digital world in a way that works for Europeans. That was true before the coronavirus struck – and it’s every bit as true now.
We have a huge amount of work going on to do just that. Our white paper on artificial intelligence has set out our proposals to build an AI ecosystem of trust. We’re working with EU governments to improve cybersecurity for vital infrastructure, like 5G networks. We’re putting together a new Digital Education Action Plan, to make sure all Europeans can have access to the equipment and the skills they need, to get the most out of e-learning. And a few weeks ago, we began consulting on a Digital Services Act, to keep consumers across Europe safe from dangerous products and illegal content online.
Competition in a digital age
And we also have to make sure that competition works well, in this digital world.
I don’t need to tell you why that’s so important – how competition gives us the benefit of choice; how it keeps prices down; how it drives innovation, and helps to deliver the great promise of digital technology – that tomorrow will be even better than today.
But digitisation is making it harder to keep competition working the way that it should.
I like to think of competition in traditional markets as being like a coiled spring – like one of those Slinky toys that children love to play with. Companies might pull it out of shape for a while, by forming cartels or misusing their power. But when they let go, the spring snaps right back. And our job in these markets, as a competition enforcer, is to make companies let go of the spring.
But in today’s digital markets, that doesn’t always work. There can be a constant risk that by abusing their power, big companies will push a market to the tipping point, where competition is gone for ever. That the spring will be stretched so far that it no longer snaps back – that just ordering companies to stop their harmful behaviour is no longer enough, to bring competition back to these markets.
And at the same time, in the last decade or so, we’ve seen many industries – especially the ones that are most affected by digitisation – becoming more concentrated, with fewer companies controlling more of the market. We’ve seen some digital platforms gain a central position where – like a spider in the World Wide Web – they see everything that’s going on, and collect vital data that others can’t get. So the spring can be broken before even we start. Competition may not work, not because of a company’s actions, but simply because of the structure of the market.
In the last few years, competition experts and enforcers around the world have been thinking about how to tackle these problems. At the Commission, we’ve learned a lot from the report which three special advisers delivered to us last year – as well as from the work that others have been doing.
One thing that’s clear from all that is that there’s no one, simple solution. We need a mix of approaches. That includes new regulations, and new competition powers. But it also means making full use of the ones we already have.
Firm enforcement of existing competition rules
Digital markets can tip very fast. So competition enforcers need to move just as quickly. But there are some corners that we just can’t cut. We can’t take a decision until we’ve done a thorough investigation. We have to look very carefully at all of the evidence. And in our Union of law, we have to give companies the chance to defend themselves.
That’s the right thing to do. But it can make it hard to reach a conclusion before it’s too late.
One answer to that problem is to make more use of interim measures, to keep things from getting worse while we consider all the evidence. Last year, for the first time in nearly 18 years, we used that power to temporarily stop Broadcom enforcing a term in its contracts with customers, which banned them from buying chips from anyone else. And in this digital age, I don’t expect that it will be another two decades before we do this again.
Even with interim measures, we may not always manage to step in before a market can tip. But that doesn’t mean we have to accept a monopoly as a fait accompli. It’s been clear for many decades that we have the power to impose what you might call “restorative remedies” – ordering companies to take positive action to undo the damage that they’ve done to competition. In their report, the special advisers urged us to make use of these remedies – and we’ll do just that, whenever we find that it’s the right thing to do.
New ex ante regulation
But there’s only so much these existing powers can do. We also need new ways to tackle the problems that digitisation causes. And one part of the answer could be new regulatory rules.
At the start of this month, we launched a consultation to get views on what we call our “inception impact assessment” for these new rules. Though we talk about “inception”, that’s nothing to do with planting dreams in people’s heads – or perhaps it is, if fairer digital markets are the sort of thing you dream about. It’s actually a sort of roadmap, which sets out the main options for how the rules could work. And one of those options would be a clear list of dos and don’ts for the platforms that act as gatekeepers in our digital world.
That might include, for example, rules to stop platforms misusing their position as both player and referee – both owning a platform, and competing with others that rely on that very same platform. One possible rule, on that list of dos and don’ts, could be a rule against platforms displaying their own services more prominently than they do for their rivals.
We’ve also seen that gatekeeper platforms can make it difficult for others to compete, by keeping control of data that rivals would need to serve customers – even when those customers are happy for their data to be shared. So another rule could involve a duty for these platforms to share real-time customer data with other businesses, when those customers request it.
In all this, it’s important to focus on the things that matter most. Not every platform is one of those huge gatekeepers, with the power to make or break the businesses that rely on it. And the kind of behaviour that’s harmful when a big gatekeeper does it, can be entirely innocuous when it’s done by a less powerful platform. So it would make sense to focus the rules on the actions of the gatekeepers that pose the most serious threat to fair digital markets.
A new competition tool
These regulations wouldn’t replace the competition rules – instead, the two would work together. And there’s nothing new about that – as competition enforcers, we’re already deeply involved in keeping competition working in dozens of regulated markets, from railways and aviation to energy and banking.
But for that partnership to work, competition authorities need to have the powers to hold up our end of the deal. And in a digital age, where the very structure of a market can create problems for competition, that means we need the power to do more than investigate individual cases. We also need to be able to tackle structural problems, which our existing tools don’t allow us to deal with. And we need more effective ways to tackle concerns that affect many markets at once, rather than using a series of individual cases to fight what’s really a systemic problem.
So there’s a gap here. But it’s a gap we can fill – and several of the world’s competition authorities already show the way.
In Greece and Iceland, Romania and the UK, Mexico and South Africa, the competition authorities can carry out market investigations, and impose remedies to fix any competition problems they find. And there’s growing support – including, for instance, from the European consumers’ organisation, BEUC – for the European Commission to be able to to do this, too. So earlier this month, we launched a consultation on a new competition tool.
This new tool would let us deal with structural problems with competition, when we can’t do that with the powers that we already have – or when those existing powers would be much less effective. It would let us investigate markets, in the same rigorous way that we already look into individual cases – with the same exacting standards of proof, the right for the companies involved to defend themselves, and the need for the decisions that we take to stand up in court. And if we did find problems, we could intervene. Not by fining companies, or finding them guilty of breaking the rules – but by imposing obligations that would protect competition. That could involve duties to behave in a certain way – to make data available to others, for instance. As a last resort, it could even mean breaking up companies, to protect competition.
This tool wouldn’t replace the powers we already have. We’d still primarily investigate cartels, agreements that harm competition, and abuses of power under those existing rules. But the new tool would also allow us to act when those rules aren’t enough to keep markets competitive.
For instance, it would mean we could deal with concentrated markets where companies keep their prices in line, not by agreeing to form a cartel, but just by taking care not to undercut each other. That tacit collusion can be especially easy in a transparent digital world like ours, where companies can constantly watch each other’s prices, and change their own very quickly in response. When there’s no agreement, that’s not illegal under the rules as they are now – even though it means that consumers end up paying more than they should. But with this new tool, we could tackle this problem.
We could also deal better with markets that are prone to tip. We could move a lot faster to prevent this from happening, by stepping in as soon as a company starts to misuse its power to drive out competition – even if it isn’t yet big enough to have broken the competition rules as they stand. And with just one investigation, we could deal with a situation where a gatekeeper platform is using its power to drive out competition in a whole series of markets.
Many of the biggest issues that this tool could help us resolve are linked to digital markets. But I doubt that it would make sense to apply it only to these markets – instead of covering the whole economy, as our existing competition powers do.
That’s partly because the sort of issues I’ve discussed come up in many other markets as well. In fact, the Greek, Icelandic and British competition authorities have so far only used this type of power in markets that aren’t digital.
It’s also because the digital transition is affecting pretty much every industry there is. So it’s hard to draw the line between what’s digital and what isn’t – especially when you consider that the rules we come up with now should be ready for the future, when that line may get even more blurred.
With these three elements – with firm enforcement of the existing competition rules, new, clear-cut and well defined regulation, and also this new competition tool – we can help to make sure that digitised markets work for everyone.
The challenge now is to put these ideas into practice. And for that, we need your help – the help of competition experts and consumer groups, businesses and national authorities – to help us design the best rules that we can.
Our two inception impact assessments – on new regulations and the new competition tool – are still open until the end of June. Our broader public consultation on the new competition tool is open until 8 September. And if those consultations, and the other evidence that we’re gathering, confirm that we need new competition powers, we plan to put forward a proposal for a new law to make the new competition tool a reality, by the end of this year.
There’s a huge amount at stake here. If our society can adapt to the challenges that digitisation brings, we can look forward to wider choice, new services and devices, lower prices, new possibilities, better lives. But if we fail to adapt, then the dark side of technology will get the upper hand. And we’ll have no one to blame but ourselves.
So the changes that I’ve mentioned today are a choice – a choice to take charge of our digital future. And I hope you’ll all join me, in making that choice into a reality
Link to "White Paper on Artificial Intelligence - A European approach to excellence and trust": https://ec.europa.eu/info/sites/info/files/commission-white-paper-artificial-intelligence-feb2020_en.pdf